Between a frenzy of beauty acquisitions and the Kardashian-Jenner cosmetic lines sparking a celebrity rush into color and skin care, the rest of the year moving into 2018 is primed to intensify on both of these fronts. While big buys and celebrities with social media influence have dominated headlines, blogger and vloggers, the wellness movement, rapid retail expansion and a steady stream of new ingredients and delivery systems are fast steering a rapidly evolving beauty industry. Here, a roundup of the year’s predominant trends.
Beauty M&A so far in 2017 has been chugging along, but is expected to pick up steam in the back half of the year, according to financial beauty sources. Many of the bigger brands have been sold (companies and private equity firms have collectively been on a buying spree for a few solid years) and the remaining takeover or investment targets are smaller than they used to be. At the same time, competition is increasing, with more private equity firms than ever looking to invest in a category that has given their competitors solid returns in the past. Several companies have been said to have hired bankers to consider deals, including Andalou Naturals, Dr. Brandt, Lime Crime, Mychelle Dermaceuticals, Nest and Tatcha.
Ingredient-wise, Vitamin C and CBD oil are each having a moment in the spotlight. CBD oil (derived from cannabis or hemp) is known to reduce inflammation and hydrate skin, and is making its way into more products. Lord Jones has had its CBD Pain and Wellness Formula Body Lotions on the market for some time — but other brands, like I. Pekar, with its Cannabis Infused Tissue Repair Serum, are coming into the market now. On the Vitamin C side, brands are turning to more natural sources, like berries, as a source or stabilizer. Tatcha’s Violet-C Radiance Mask contains two types of vitamin C and Japanese Beautyberry, and new brand 8 Faces launched with a solid oil that contains Amla Berry, which has high doses of vitamin C.
The power of the influencer isn’t dwindling, but the way their influence makes an impact has separated them into two categories: converters or brand builders. Converters are able to sell products and produce a return on investment while brand builders increase brand awareness, but typically don’t bring in large revenue. The type of followers an influencer has distinguishes which group they belong to rather than simply looking at their follower count. Meanwhile, influencers like Chiara Ferragni are developing into the next generation of “celebrities,” with big-budget campaigns and magazine covers typically reserved in the past for A-list actresses.
The beauty retail scene is primed for expansion with digitally savvy retailers and monobrands attracting Millennials by the masses. While there’s been much buzz around the opening of Ulta Beauty’s Manhattan flagship, retailers like Sephora and Bluemercury have used augmented reality and other innovations to stay relevant with consumers and deliver a unique in-store experience. The mass market, including Wal-Mart, Walgreens and CVS, is following suit with upgraded fixtures, iPads and expanded brand assortments. For monobrands, E.l.f. and NYX are competing head-on as both open freestanding stores at a fast rate.
Natural beauty may be a hard category to define, but the trend is showing no signs of waning. Products touting “clean” ingredients and wellness claims are resonating with consumers who are paying more attention to what they put on and inside their bodies. Large retailers have taken notice: Sephora has unveiled natural makeup brands, like Antonym and Lilah B., in its stores and Credo Beauty continued its expansion nationwide this summer. Ingestible supplements are also on the rise. The NPD Group states the category is the smallest, yet fastest-growing category it tracks.
Celebrities are bringing their star power to the cosmetics category. Victoria Beckham and Kylie Jenner, who have already established their presence in the beauty sector, are continuing the growth of their respective companies. Beckham is on track to double her product offerings from her first collection of the Victoria Beckham Estée Lauder line and triple distribution. Jenner, who revealed to WWD that her company earned $420 million in revenue in just 18 months, is projecting another $386 million in sales by the end of the year. Newcomers include Kim Kardashian West, who reportedly generated sales of $14 million in less than 24 hours when her namesake brand launched in June; Madonna, who is bringing her skin-care line, MDNA Skin to the U.S. this September, and Rihanna, who is launching the much-anticipated Fenty Beauty by Rihanna at Sephora and Harvey Nichols in September.